Tuesday, May 24, 2016

Broken Internal Economies

I am a big fan of Carleton, and have been quite happy here as my fourth year nears its end.  But of course there is a but. 

But its internal economy is broken.  There are some departments/units/whatever that charge for their services and their space, and the rest of the university has to find money to pay.  The most annoying example of this: that my building was built to be a platform for outreach, but we have to find money within our budgets to pay for using that space most of the time.  Not only that, but we have to pay fairly high fees for audio-visual services, for set-up and all the rest.  If we want to provide some parking for our guests, we have to pay for that and the rates are comparable to downtown Ottawa and we are not in downtown Ottawa.  This means, of course, that it often makes more sense to hold events at downtown hotels.  Or not hold them at all.

In some cases, this makes sense.  It makes sense to charge for printing services since there is a real cost to each thing printed, and it creates disincentives for printing too much stuff (seeing the printing services folks advertise across campus is annoying since they have a monopoly, so why waste our money on that?).  In other cases, it does not and is quite frustrating.  When I thought about podcasting with a pal, we went to the journalism school to see if they could help out.  They told us that they have to pay hourly wages for their technician, which was understandable, and also pay for the space.  Ooops.  So, that stopped our inquiry right there since we didn't expect to make any money from podcasting, and if we did, didn't want it to go to someone else's space income.

Those with resources that others need can charge a price for them.  Those without such desired resources have to use, in most cases, externally generated funds to cover this stuff--grant money.  Instead of it going to graduate and undergraduate students for their research assistance (the major category in which much grant money is directed), it goes to those who have something to sell.

I whine, of course, because I ain't got nothing to sell in this internal market.  I was tempted to make meth, but that didn't work out so well for Walter White.  After the conversation with the J school that proved to be unproductive, I thought I might charge their students who seek to interview me for their assignments.  But taking out my grumpiness on the students would be wrong.

Of course, universities have to allocate space and other scarce resources, but charging units for that stuff is problematic.  I'd like to see fake money allocated to all the units (Carleton Bucks!) and then folks could use the resources until they max out or can apply for more bucks if the projects are for the Greater Good.  This would be complicated at first, but the new system would not serve as a deterrent to doing the stuff that the university wants us to do, such as outreach. 

Carleton is not alone in this, as university administrators across North America (the world?) have learned that one way to deal with budgetary pressures is to try to extract grant money to pay for stuff.  In the US, there is a more obvious way this is done--universities set a rate for "indirect" costs, which means that when you apply for a grant, you get x plus y, with y being the money going to the university for the indirect costs of the research--electricity, sewage, heating, whatever else.  Canadian schools get something like this as well, but it is not so explicit.  In the US, some of the indirect flows back down to the units, but most is kept at higher levels to pay for stuff. 

The key with any financial system is to figure out how to design it so that it incentivizes the things that are desirable and disincentivizes things that are less desirable.  The problem with the current system at Carleton is it creates disincentives for doing some of the stuff the university wants us to do.  Oh well, I probably should have asked my favorite Carleton economist/former Associate Dean how this works, but I am afraid she might have charged me for her services.

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